(Corrects second paragraph show BCE is based in Montreal, not
Toronto)

By Euan Rocha and Alastair Sharp

TORONTO, July 23 (Reuters) - Canada's largest telecom
company, BCE Inc , said on Wednesday it will pay
C$3.95 billion ($3.68 billion) to take regional telecom Bell
Aliant private, buying the 56 percent stake it does not
already own to cut expenses and bolster its offerings in
Atlantic Canada.

Montreal-based BCE said the deal will result in C$100
million in annual cost savings, partly due to the elimination of
duplicate public company costs.

"Privatizing Bell Aliant within BCE supports our dividend
growth model and capital investment strategies," Siim Vanaselja,
BCE's chief financial officer, said in a statement, adding that
BCE will also maintain its investment-grade credit ratings
following the expected close of the deal in late November.

BCE, which already controls about 44 percent of Bell Aliant,
said the deal values the remainder at C$31 a share, a premium of
10 percent to the stock's close on Tuesday.

Shareholders of Bell Aliant, which also offers services in
rural Ontario and Quebec, can elect to receive either C$31 in
cash, or 0.6371 of one BCE share, or C$7.75 in cash and 0.4778
of one BCE share for every share they own, the companies said in
a joint statement.

Shares in BCE were up 0.8 percent at C$49.39 at midmorning
on Wednesday on the Toronto Stock Exchange, while Bell Aliant
shares jumped more than 10 percent to sit just above BCE's offer
price at C$31.17.

BCE competes with Rogers Communications Inc and
Quebecor Inc in Eastern Canada for phone, Internet and
TV customers, while sharing a national wireless network with
Western Canada-focused Telus Corp.
Continued...